How do firms obtain benefits from quality awards: An empirical study of the winners of the China quality award

Abstract

PurposeQuality awards are widely considered symbols of successful quality management. The purpose of this paper is to empirically test the effects of the China Quality Award (CQA) on firms' performance. The study further explores how the benefits due to CQA are affected by contextual factors.Design/methodology/approachUsing the data of CQA winners from 2001 to 2016, the event study method is applied to analyze the abnormal performance of winners. Furthermore, multiple regression models are proposed to evaluate the effects of contextual factors on the relationship between the award and profitability.FindingsThe findings show that CQA has positive impacts on profitability and fixed asset efficiency but not on labor productivity. Besides, state-owned firms and firms with high innovation intensity obtain more profitability benefits than others.Originality/valueThis is the first study to explain the relationship between quality awards and firm performance from a theoretical perspective, providing new insights into the quality management and performance literature. Furthermore, this study deepens the understanding of the relationship between quality awards and performance and reveals new implications. Some of the contextual factors examined, such as innovation intensity, are considered for the first time in quality award research.